Comment: Stroke of a pen could create opportunities in Irish financial services

There are over 13,000 people working in the Irish investment funds industry, working on over 13,000 investment funds of which around 6,000 are domiciled in Ireland.

It is difficult to estimate how many jobs are created each time an investment fund is established in Ireland, but it is clear that investment funds create quality jobs across the areas of accounting, financial reporting, legal and compliance.

The Government has established its strategy for the sector in the IFS 2020 report and aims to boost the number of jobs in international financial services across Ireland from 35,000 to 45,000 before the end of 2019.

The IFS 2020 isn’t a novel idea. In the late 1980s, the IFSC was established in the derelict Dublin docklands to create jobs.

The result was a thriving Irish investment funds industry working on financial products such as UCITS — Undertakings for Collective Investment in Transferable Securities.

These retail funds were only an idea back in 1985 but are now the investment backbone of most of our pension funds.

Until recently, most investment funds in Ireland were established as investment companies under the Companies Acts.

That wasn’t an ideal set-up. The investment funds industry here recognised that a more suitable corporate vehicle was needed — to accommodate selling shares to investors in different jurisdictions.

The industry worked with the Minister for Finance to create a new type of investment company, the ICAV.

It came into being with the Irish Collective Asset-management Vehicles Act in March 2015.

Between March and the end of August, the Central Bank authorised 55 ICAVs. The number of ICAVs being created shows no sign of abating.

That’s proof that funds will locate in Ireland if Government and stakeholders work together to create the appropriate legal structures. But many reputable fund promoters of non-EU investment funds find it extremely difficult to market their funds into the EU due to regulatory restrictions from the EU Alternative Investment Fund Managers Directive, which became law in 2013.

The ICAV Act allows non-EU investment funds to migrate to Ireland and to be authorised by the Central Bank, provided they come from jurisdictions that are considered acceptable by the Minister for Finance, and meet the requirements of the Central Bank.

In July, the Minister for Finance designated Grand Cayman and the British Virgin Islands as acceptable jurisdictions.

The more funds in Ireland or funds that move here means more jobs for people in Ireland. But a number of other international fund jurisdictions similar to Cayman and the British Virgin Islands should also be approved by the Minister for Finance, including Jersey, Guernsey, Bermuda and the Isle of Man.

The ICAV Act was introduced with a degree of fanfare in March. Although it is a particularly busy time of the year for the Minister and his Department there is really no reason to delay taking the necessary steps to approve these jurisdictions – it’s a straightforward process.

Doing so will be a declaration to the international funds industry that Ireland is open for business.

Trevor Dolan is a partner in financial services at LK Shields.